The Advocate Health Care Network has a Disability Income Protection Plan that provides funds for employees who have a long- or short-term disability and are unable to work because of sickness or injury. The plan coordinates its own benefits with benefits paid by other parties, such as Social Security. However, complaint for this class action alleges that the Plan refuses to recognize the common fund doctrine, which allows participants to recover any legal or other expenses they incur in obtaining those benefits.
The class for this action is all persons who received benefits under the Advocate Health Care Network Disability Income Protection Plan and who have also received “other income benefits” and who were required to reimburse the plan for the full amount of the other income benefits received without any credit being given for legal fees and expenses incurred in generating the other income benefits.
Plaintiff JoAnn Mehring was working for Advocate and was a participant in the Disability Income Protection Plan when she became disabled and had to stop working. The Plan granted her benefits, but it also required that she apply for Social Security Disability Insurance Benefits.
With the help of a lawyer, Mehring applied for the Social Security benefits. She was eventually granted over $34,000 in retroactive benefits. She did not receive all of that money, however. According to the complaint, $6,000 was “withheld by the Social Security Administration for the payment of attorneys’ fees” to the lawyer who had helped her get them.
In the meantime, the plan had been paying benefits to her. It now considered that it had been overpaying during the time covered by the retroactive payments. It asked for the entire $34,000.
Mehring understands that the plan rules require her to reimburse the plan for such other income. However, the complaint argues, she should be able to deduct the $6,000 she paid in legal fees in order to get the other income, because of the common fund doctrine.
The common fund doctrine came from a ruling by the Supreme Court. According to the complaint, it says that “where a benefit plan seeks reimbursement of funds received from a third party[,]” then reimbursement to the participant of the legal expenses incurred in obtaining those funds “is required in all situations unless the Plan document explicitly disclaims the operation of the common fund doctrine” [sic]. The complaint says that the plan at issue here does not have any such disclaimer.
The complaint brings suit under the provisions of the Employee Retirement Income Security Act (ERISA).